1. Introduction to the PVB Interlayer Film Industry Chain
The PVB interlayer film industry is a sub-sector of the plastic products industry. PVB interlayer film is a good adhesive material for laminated glass, with thicknesses mainly of 0.38mm, 0.76mm, 1.14mm, and 1.52mm, and can be processed in multiple layers. It is usually sandwiched between two pieces of glass and bonded under high temperature and pressure to form PVB laminated glass.
PVB laminated glass has high strength and toughness, strong impact resistance, continuous impact resistance, and intrusion resistance. Customized PVB laminated glass also possesses multiple characteristics such as sound insulation, heat insulation, UV absorption, and water resistance, and is widely used in industries such as automotive, construction, and photovoltaics. The industry chain of PVB interlayer film is relatively clear, with a complete industry chain including: upstream products such as PVA resin, butyraldehyde, and other chemical products; midstream products such as PVB resin and PVB interlayer film products; and downstream products mainly including automotive laminated glass, building laminated glass, and photovoltaic modules (PVB double-glass photovoltaic modules), with end users primarily being automotive manufacturers, construction companies, and photovoltaic power generation companies.
The upstream of the PVB interlayer film industry includes the chemical industry such as PVA resin. PVA resin, butyraldehyde, hydrochloric acid, and plasticizers are the main raw materials for the production of PVB interlayer film.
1. The prices of PVA resin, butyraldehyde, hydrochloric acid, and plasticizers directly lead to fluctuations in the cost of PVB interlayer film products;
2. The quality of PVA resin, butyraldehyde, hydrochloric acid, and plasticizers directly affects the quality of PVB interlayer film products;
3. The market supply capacity of PVA resin, butyraldehyde, hydrochloric acid, and plasticizers affects the production capacity and timely delivery of products in this industry. In recent years, the market supply of chemical raw materials such as PVA resin, butyraldehyde, hydrochloric acid, and plasticizers has been sufficient and reliable, but price fluctuations can have a certain impact on the profitability of this industry.
The downstream of the PVB interlayer film industry mainly includes industries such as automotive, construction, and photovoltaics, with end users primarily being complete vehicles and parts, construction, and photovoltaic power generation industries. As an important component of downstream products, the development of the PVB interlayer film industry is closely related to the development of downstream and end-user industries. Currently, due to the limitations of sales radius, most companies in the building laminated glass industry are relatively small, geographically dispersed, and produce a wide variety of laminated glass specifications, leading to high costs for customer development and maintenance, as well as product transportation for PVB interlayer film companies. Therefore, adopting a distributor model for such downstream companies can reduce operational and management costs. In the automotive laminated glass industry, there are mainly large well-known companies such as Fuyao Glass, Yaopi Glass, and Xinyi Glass, with high industry concentration. They have strict review systems for suppliers. Once PVB interlayer film companies enter their supply chain and become qualified suppliers, they can obtain large volumes of standard orders stably over the long term, reducing production and operational costs. The double-glass photovoltaic module industry has larger companies and higher concentration, with similar and standardized product specifications, which is beneficial for PVB interlayer film companies to provide products in large quantities, efficiently, and stably.
2. Development Status of the PVB Interlayer Film Industry
Since the introduction of PVB interlayer film in 1931, it has been an excellent interlayer material for safety glass in buildings, automobiles, and airplanes. Currently, the global development of the PVB interlayer film industry has the following characteristics:
First, there is insufficient total production capacity of PVB interlayer film worldwide, with a large market gap, and development is uneven across regions, mainly due to the high technical requirements for PVB interlayer film production, which has long been dominated by several major international companies such as Solutia in the USA, Sekisui Chemical in Japan, and Kuraray, with Solutia being the largest PVB producer globally.
Second, the process of mergers and acquisitions in the PVB interlayer film industry is accelerating, with increasing business concentration. For example, Sekisui Chemical acquired DuPont's glass lamination solutions and vinyl (GLS/vinyl) business for $543 million on November 21, 2013.
Third, the production of PVB interlayer film in developing countries such as China is developing rapidly.
Fourth, the Asia-Pacific region is the largest market for PVB interlayer film globally, accounting for a significant portion of global consumption.
In the Asia-Pacific region, China has the largest consumption, followed by Japan, Taiwan, South Korea, and India. As early as the late 1950s to early 1960s, in response to the needs of the aviation and military industries, under the leadership of the former Ministry of Chemical Industry, research and development of PVB resin powder and interlayer film began in Jinxi, Tianjin, and Shanghai. In 1967, the Shanghai Plastics Research Institute successfully developed domestically produced PVB interlayer film, but it could not be produced on a large scale. In 1993, Qinhuangdao Jiahua Plastics Co., Ltd. introduced China's first PVB interlayer film production line from Canada’s Macrolon. During the trial production period, the quality of domestically produced PVB interlayer film had serious defects, such as moisture content and shrinkage rates that were significantly different from foreign products, and the first pass rate for laminated glass produced with domestic PVB interlayer film was less than 80%. Later, through the continuous efforts of experts, production issues such as material feeding bridge in the film production line, high moisture content in summer, and unevenness of the film were gradually resolved through technical upgrades of the PVB interlayer film production line, leading to a gradual stabilization of production and a significant increase in the pass rate. After years of development and technological upgrades, the performance level of domestically produced PVB interlayer film has now reached the level of foreign products. China is the largest consumer of PVB interlayer film, with domestic applications mainly in the automotive, construction, and photovoltaic sectors.
3. Development Status of PVB Interlayer Film Downstream
1. Automotive-grade PVB interlayer film
The automotive industry is an important pillar industry of the national economy, with a long industrial chain, wide coverage, strong driving force, and high degree of internationalization, occupying an important position in the industrial systems of major global economies. Since the reform and opening up, with the development of the domestic economy, China's automotive industry has built the largest, most complete, and well-supported automotive industry system in the world, achieving remarkable achievements.
With the deepening of a new round of technological revolution and industrial transformation, the automotive industry is accelerating the integration of related technologies with energy, transportation, and information communication, reshaping the global automotive industry landscape and bringing new growth points for domestic automotive-grade PVB interlayer film companies. According to statistics from the China Association of Automobile Manufacturers, in 2022, China's automotive production and sales reached 27.021 million and 26.864 million units, respectively, representing year-on-year growth of 3.4% and 2.1%, continuing the growth trend of the previous year. China's total automotive production and sales have ranked first in the world for 14 consecutive years.
From the perspective of automobile ownership, China's automotive industry provides a relatively stable application demand for PVB interlayer film. According to the latest data from the Ministry of Public Security, as of the end of November 2022, the total number of motor vehicles in the country reached 415 million, of which the number of cars reached 318 million; the number of motor vehicle drivers exceeded 500 million, with car drivers reaching 463 million. Currently, both the total number of motor vehicles and drivers rank first in the world. With the growth of consumer demand and technological advancements, people's requirements for the quality and performance of cars are becoming increasingly high. As an important functional and safety component in the vehicle assembly, the demand for high-end automotive glass is gradually being released. Driven by downstream demand, the automotive glass industry is gradually showing trends of high quality, functionality, and intelligence.
Currently, almost all automotive front windshields on the market use laminated glass. At the same time, with breakthroughs in domestic PVB interlayer film production technology and improvements in product quality, a few domestic PVB interlayer film companies have produced products that have reached the same quality level as similar foreign products, breaking the long-standing market monopoly of foreign companies. The demand for automotive glass mainly comes from two parts: one part is for new cars produced in the current year, which occupies the vast majority of automotive glass consumption; the other part is for after-sales maintenance, mainly determined by the ownership and replacement volume, with little cyclical fluctuation.
According to research reports from China Galaxy Securities and Dongfang Qianhai Securities, it is estimated that the demand for PVB interlayer film for domestic automotive laminated glass will reach about 65,500 tons in 2025, and the global demand for PVB interlayer film for automotive laminated glass is expected to reach about 192,200 tons in 2025. Therefore, the current market demand for automotive-grade PVB interlayer film is large, and with the release of high-end market demand driven by consumer demand and technological advancements in the industrial chain, supported by national policies, domestic products will gradually occupy the market, with broad future development prospects and significant market growth potential.
② Building-grade PVB interlayer film
The construction industry is an important material production sector of the national economy and the foundation for the development of the entire national economy. It is closely related to the development of the national economy and the improvement of people's living standards.
According to data from the National Bureau of Statistics, the total area of completed buildings by construction enterprises nationwide increased from 3,587,362,300 square meters in 2012 to 4,080,275,000 square meters in 2021, with residential, commercial, and office buildings, which have a high usage rate of building laminated glass, accounting for about 76.54%.
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Currently, building laminated glass is mainly used in glass curtain walls in buildings. In 1983, marked by the curtain walls of the Great Wall Hotel in Beijing and the Lianyi Building in Shanghai, China's building curtain wall industry began to take off. With the continuous rapid development of China's national economy and the acceleration of urbanization, China's building curtain wall industry has achieved leapfrog development from non-existence to existence, from foreign capital occupying the market to domestic enterprises taking the lead, and from imitation and introduction to independent innovation.
By the early 21st century, China had developed into the world's largest producer and market for curtain walls. According to data from the China Postal Securities Research Institute, the total output value of building curtain wall projects has increased from 411.3 billion yuan in 2016 to about 458.8 billion yuan in 2021, with a growth rate of 8.8% in 2021. The key to enhancing the output value of curtain walls in the future lies in the application of new materials, new technologies, and new processes. Building-grade PVB film, as a new material with many advantages and significant research and development potential, can help enterprises with innovative advantages break the inherent pricing system of existing products in a series of complex engineering projects, creating higher output value and profits.
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With the implementation of the "13th Five-Year Plan" for the technological development of the building materials industry, the trend of green and environmentally friendly development will change the traditional development model of building materials. Technological innovation is the key engine to improve the development quality of the building materials industry and achieve ecological civilization and environmental beautification. After establishing the key direction of technological innovation as green, healthy, and intelligent, the new energy-saving doors and windows market is expected to become a sunrise industry under policy guidance, releasing significant market potential. It is expected that the market scale of green and energy-saving glass products in China will continue to expand in the future, with bright market prospects. PVB laminated glass, which has functions such as sound insulation, heat insulation, and UV resistance, will become a key energy-saving and environmentally friendly material in the construction industry in the future. According to data from the National Bureau of Statistics, the national output of laminated glass in 2022 was 142,443,000 square meters, a year-on-year increase of 8.32%, with stable output growth providing downstream market support for the demand for PVB interlayer film.
According to data compiled from the Southwest Securities research report, the national output of laminated glass from 2023 to 2026 is referenced based on the compound growth rate forecast from 2017 to 2022. The demand for PVB interlayer film is calculated based on a requirement of 1.14mm (thickness) * 1.069g/cm3 (density) of PVB interlayer film per square meter. It is estimated that the demand for PVB interlayer film for laminated glass will reach about 218,700 tons and about 236,200 tons in 2025 and 2026, respectively. Therefore, as China's construction industry gradually develops towards safety, energy efficiency, environmental protection, and health, the market demand for PVB interlayer film in the construction industry will gradually be released.
③ Photovoltaic-grade PVB interlayer film and its photovoltaic components
A. High prosperity development of the photovoltaic component industry
After experiencing a winter period, China's photovoltaic industry has gradually warmed up since 2012 and has entered a new round of prosperity cycle. According to data from the Photovoltaic Industry Association, by the end of 2021, global photovoltaic component production capacity and output reached 465.2GW and 220.8GW, respectively, with year-on-year growth of 45.4% and 34.9%, continuing to maintain rapid growth. From the perspective of manufacturing layout, the global production of photovoltaic components is still centered in mainland China. In 2021, the production capacity in mainland China reached 359.1GW, accounting for about 77.2% of the global total capacity, with a year-on-year increase of 114.8GW and 0.9 percentage points; the output reached 181.8GW, accounting for about 82.3% of the global total output, with a year-on-year increase of 57.2GW and 6.2 percentage points.
B. Significant increase in the penetration rate of bifacial components
Bifacial components can absorb reflected light from the ground and scattered light from the space on the back side, thus having a higher power generation capacity compared to monofacial components, with a power generation gain of about 5%-30%. The specific gain size is related to ground reflectivity, array height, array spacing, and surrounding environment. Previously, the application of bifacial technology was slow due to difficulties in promotion, such as high installation costs and operational risks due to excessive weight, insufficient strength of photovoltaic glass, lack of unified standards for back-side power generation, and few empirical cases.
Since 2018, driven by the technical requirements of the leader project, a large number of bifacial power generation components have been applied on a large scale. Since then, component manufacturers have accumulated a lot of experience regarding the characteristics and output of bifacial components, and the demand for bifacial solar cells has begun to accelerate. In 2021, the penetration rate of bifacial components was 37.4%. In 2022, with downstream applications recognizing the power generation gains of bifacial components, the market share of bifacial components increased by 3 percentage points to 40.4% compared to 2021, and it is expected to exceed 50% by 2024, becoming the mainstream component packaging technology.
C. PVB interlayer film is gradually penetrating the photovoltaic encapsulation film field
PVB interlayer film, as a packaging material, is mainly used in the double glass field (one side of traditional single glass modules is a regular backsheet, while PVB packaging mainly uses a double-sided lamination process). Currently, the usage ratio of PVB interlayer film is still relatively low due to high production barriers for photovoltaic-grade products. However, with its excellent properties such as high adhesion, high water permeability resistance, and high weather resistance, it is gradually penetrating the market as the application of double glass modules increases.
a. Performance advantages of PVB interlayer film. According to the China Energy Conservation report on "PVB Double Glass Modules and Mass Production Solutions", under the same testing conditions, PVB double glass photovoltaic modules have better water permeability resistance than POE and EVA (under conditions of 121°C temperature and 100% humidity for 192 hours, the water permeability thickness of the PVB interlayer film is 0mm, while the water permeability widths of POE and EVA reach 10mm and 30mm respectively). Additionally, PVB interlayer film outperforms POE and EVA in tests for acid, alkali, and salt mist resistance, high-temperature resistance, and impact resistance. Its good weather resistance and performance in extreme environments also suggest that the lifespan of PVB interlayer film is expected to exceed that of EVA and POE (referring to traditional building-grade PVB interlayer film, which can have a lifespan of up to 50 years). The reason for the strong water permeability resistance of PVB interlayer film lies in the bonding process with glass, where hydroxyl groups in the adhesive film (from the molecular ethylene glycol chain segments) can form strong hydrogen bonds with oxygen atoms in the glass, causing the hydrophilic groups at the interface to disappear, making it difficult for water vapor to penetrate. In contrast, POE (or EVA) typically requires the use of coupling agents during processing to achieve the connection between the adhesive film and glass, but the relatively loose connection of the coupling agent leads to lower interfacial bond energy, making water vapor penetration easier.
b. Processing equipment for PVB double glass photovoltaic modules. The complexity of the processing technology and the lack of equipment are important factors restricting the application of PVB interlayer film in the photovoltaic packaging module field. Early PVB interlayer film used in photovoltaic module production generally required high-pressure autoclaves or a combination of roller pressing/high-pressure processes, and indicators such as processing efficiency and qualification rates could not compare with those of photovoltaic modules produced using lamination processes, making it difficult to promote the application of PVB interlayer film in the photovoltaic module field. Domestic companies like Destar have continuously increased their exploration of PVB double glass module applications, and the self-developed PVB double glass processing technology can achieve mass production of PVB double glass modules relying on improved lamination equipment. Its processing efficiency, qualification rate, and energy consumption are now comparable to EVA and POE adhesive film equipment, while also being compatible with other packaging materials for module production, breaking through the barriers of processing equipment and technology, and continuously gaining recognition from downstream customers.
c. Availability of PVB materials. Although EVA resin has gradually achieved localization, domestic production capacity still cannot meet demand, necessitating a large amount of imports. The supply of photovoltaic-grade POE resin is monopolized by foreign manufacturers such as Mitsui Chemicals, LG Chem, and Dow Chemical, and domestic manufacturers do not yet have large-scale production capabilities. Both EVA and POE resin production belong to the petrochemical industry, which has a long capacity construction cycle, while the photovoltaic industry has a continuously growing demand for packaging adhesive film materials, leading to a relatively tight supply and demand situation, which is unbalanced. The relatively tight and unbalanced supply and demand for raw materials has led to significant fluctuations in the market prices of EVA and POE resins in recent years, increasing the operational risks for photovoltaic adhesive film companies. Furthermore, since POE resin has not yet achieved localization, its supply is relatively limited and raw material costs are high, restricting the application promotion of POE adhesive films with excellent performance in the photovoltaic field. According to information from China Chemical Information Network, companies like Destar and Zhongxin Photovoltaic Materials have begun to possess the production capacity for photovoltaic-grade PVB interlayer films. Comparing the localization stages and product performance advantages of EVA, POE, and PVB materials (photovoltaic grade), PVB materials are gradually replacing a portion of the market share of EVA and POE, which is in a favorable window period. According to data compiled from Southwest Securities research reports, the demand for photovoltaic-grade PVB interlayer films is approximately 127,000 tons.
In summary, the current market demand for domestic automotive-grade, building-grade, and photovoltaic-grade PVB interlayer films and their photovoltaic modules is large, and the future development prospects are broad.
IV. Development Trends of the PVB Interlayer Film Industry
① The PVB interlayer film industry is gradually achieving localization.
Against the backdrop of long-term foreign monopoly by PVB interlayer film companies, domestic PVB interlayer film companies are continuously rising, producing high-quality PVB interlayer films by mastering PVB resin and PVB interlayer film production technology, gradually achieving localization of PVB interlayer films.
In the early days, the domestic PVB interlayer film market was occupied by foreign chemical giants such as Kuraray, Asahi Kasei, and Solvay, and most domestic companies mainly produced PVB interlayer films by recycling edge scraps, resulting in poor quality that could not compete with the aforementioned foreign brands, relying only on low prices to capture the low-end market. The reasons for the formation of the above situation in the early days are mainly as follows:
First, most domestic companies lack PVB resin production technology, while foreign PVB interlayer film brand manufacturers maintain high confidentiality regarding PVB resin production technology, and PVB resin is rarely sold externally, leading to a lack of core raw material PVB resin for domestic companies, making it impossible to produce high-quality PVB interlayer films.
Second, domestic PVB interlayer film companies have long been trapped in low-end product competition. The PVB interlayer film products produced from recycled edge scraps have poor quality, severe homogenization competition, and frequent price wars, which have lowered the brand image of domestic PVB interlayer films and made it difficult to gain recognition from downstream companies. Currently, a few domestic PVB interlayer film companies have mastered PVB resin production technology and PVB interlayer film production technology, and have produced competitively priced high-quality PVB interlayer films, promoting the trend of product localization in the industry.
② Development from traditional basic PVB interlayer films to functional PVB interlayer films.
PVB interlayer films are gradually evolving from a single safety film to functional films, including heat insulation, sound insulation, and composite heat insulation and sound insulation functions. Heat-insulating PVB interlayer films are mainly used in building glass and automotive glass, characterized by their ability to block infrared radiation from irritating the skin. Compared to conventional PVB interlayer films, they can better isolate heat transfer between the inside and outside of vehicles and buildings, reducing air conditioning usage time and energy consumption, thus providing a more comfortable living and driving experience. Sound-insulating PVB interlayer films are mainly used in building glass and automotive glass, characterized by a three-layer special structure that incorporates damping materials to absorb sound waves between two layers of ordinary PVB interlayer films, effectively absorbing noise that is sensitive to the human ear. Compared to conventional PVB interlayer films, they enhance noise isolation performance, maintaining quietness indoors and in vehicles, and improving the user experience.
③ The market demand for photovoltaic-grade PVB interlayer films and their components is gradually being released.
The demand for photovoltaic-grade PVB interlayer films is gradually being released, becoming one of the trends in industry development. As a packaging material for photovoltaic modules, photovoltaic PVB interlayer films possess various product characteristics such as high light transmittance, low resistivity, and aging resistance. Compared to traditional packaging materials like EVA and POE, they can significantly extend the service life of photovoltaic modules and improve module power generation efficiency. For a long time, the application of PVB packaging materials in the photovoltaic industry has been limited due to the inherent constraints of the PVB double-glass module processing technology and the high production costs of PVB interlayer films. However, with advancements in PVB double-glass module processing technology and a decrease in the production costs of PVB interlayer films, the current market demand for photovoltaic-grade PVB interlayer films and their components is continuously being released.